The cost of market credit and the levels of foreign demand for Spanish sovereign bonds have improved in the latest Treasury auctions. Can this trend be sustainable?
The Treasury carried out all its bond placements for 2012 in October, so the government had a couple of extra months to press ahead with its debt plans in 2013. This is very good news for the Spanish economy because it means there is less uncertainty and more investor confidence in Spain.
Some analysts, like Barclays’, say that the premium risk will tighten further. Do you agree?
Yes, I do. I believe there are sound reasons to think that the risk of buying Spanish debt is now lower. The banking system will dump their load of toxic assets thanks to the so-called bad bank Sareb, so the economic forecast for Spain looks better today. Consumption may start recovering, and our GDP and nominal GDP will improve–it has surely already improved, in my opinion.
Many market voices seem to favour the conclusion that the worst of the crisis is now behind us, and a positive start of 2013 appeared to confirm it. Can we be optimistic?
Spain has better figures to show and its economy is somehow recovering in the short term, that is true. But trying to guess the future is always a tricky task. I think we still have tough times ahead, and 2013 will be a difficult year.
Our unemployment levels, for instance, are too high and there is no quick solution. Spain needs kick start consumption, something that the government has yet to present a clear policy for. The end of 2012 could have marked an inflection point, indeed, but there are lots of work to do.
From the outside, some observations seem encouraging: JP Morgan said in a recent report that Europe could overcome recession in the first quarter of the year.
My personal opinion is that it’s too soon to make such statements when one takes into account the fragility of our economic situation. Macroeconomics data offer better statistics, that is true, and a healthier scenario is plausible, but there is a huge scope for more reforms and more measures, while we still have to check whether the work done is fruitful or were mere plasters.
What is your perspective over 2013?
Government debt issues will be very important to see if investors trust our evolution, if the foreign and European capital finds again its way into our economies. We will keep an eye on manufacturing, retail sales and consumption, and so will everybody, too.